Year : 2011, Volume : 3, Issue : 1
First page : ( 42) Last page : ( 51)
Print ISSN : 0976-4925. Online ISSN : 2582-6115. Published online : 2011  29.

Initial returns and testing of winners’ curse hypothesis: An analysts of hospitalitysfctor ipos from India

Libison K B¹, Research and Teaching Assistant, Narasimham N V², Dr. Professor

¹SOMS, IGNOU, Delhi; Email: libison1@rediffmail.com

²SOMS, IGNOU, Delhi

ABSTRACT

Present paper tries to document the market performance of Initial Public Offerings (IPOs) in India issued in 2009 and 2010. It analyzes the performance of Hospitality sector IPOs in comparison with other IPOs offered during the period. The limitless growth potential of hospitality sector in India provided a good platform for business entities in hospitality sector to tap the Indian capital market. As a result of it, two Initial Public Offerings viz., Mahindra Holidays and Cox and Kings, came from hospitality sector in the year 2009; which were followed by Jubilant Food Works in 2010. The study shows that hospitality IPOs generated high first-day returns. The mean 1-day return for hospitality IPOs was 17.40% where as it was 8.80% for all IPOs in 2009 and 14.56% for all IPOs in 2010. More interestingly, average returns from all IPOs in 1-week, 2-week, 4-week and 8-week time horizons for 2009 and 2010 posted poor performance, while Hospitality sector IPOs showed positive average returns. Test of winners ’ curse hypothesis for Hospitality sector IPOs indicated that both informed as well as uninformed investors made short run gains froOOOom their IPO investment in Hospitality sector.

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Key Words:

Hospitality IPOs, Winners’ Curse Hypothesis, Underpricing, Informed Investors, Uninformed Investors.

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